Government of Maharashtra (India) explores blockchain technology to improve governance

The state government of Maharashtra, the western Indian state, has started to explore blockchain technology to improve governance delivery, and bring in greater transparency, and in turn, better trust, between citizens and government. With this, the state government of Maharashtra joins a growing list of state and central governments that are evaluating this technology.

Maharashtra is one of the more industrialized states in India, and has key industrial hubs such Mumbai and Pune areas. Mumbai is also the state capital, the largest among the Indian cities, and considered as the financial capital of India. It’s known for high concentration of banks and financial service institutions, in addition to the having significant manufacturing and services industry footprint. Pune, well-known for being a hub of automobile industry, is also increasingly attracting other manufacturing and services industry. Overall, Maharashtra’s reputation of providing a vibrant business environment is well-deserved, and this reputation has drawn people from all over India into this state for the multitude of opportunities the state offers. The large population and the need to maintain its edge in industrialization obviously makes governing Maharashtra is a very demanding job. Take the case of the massive amount of information the government generates. Officials in the state government of Maharashtra estimate that 125,000 documents are produced daily by the state government alone. The state government is also one of the largest consumers of information. Processing this vast amount of information in a transparent manner, and maintaining the sanctity of it, will be a key pillar of good governance.

There is an added incentive to the state government to try and explore technology in governance, and it’s the massive anti-corruption drive underway in India for over three and half years now, led by the union government of India (GoI). Powerful politicians and their cronies were siphoning vast sums of public money, leaving common Indian people to struggle with poverty, inadequate infrastructure, and lack of opportunities. Upon assuming charge in May 2014, the incumbent government has declared a high profile war against corruption, with spectacular results so far, for e.g. powerful corrupt politicians jailed, leakage plugged in over 400 government schemes with the aid of technology, and banning of high value currency notes aiding black money holders that forced the corrupt to come forward and declare their previously unaccounted assets. There is massive public support for the tough anti-corruption measures, and one after the other the state governments are also joining in the anti-corruption drive. The state government of Maharashtra believes that blockchain can help them on this count, too.

Blockchain can help governments eliminate middlemen and maintain tamper-proof information:

Blockchain is a technology where a group of computers on a network maintain shared, mathematically proven, and immutable information. It’s a distributed database, where computers on the network, also called ‘nodes’, can see the entire information on the blockchain. Block records, also called ‘blocks’ are linked together with a predetermined protocol, and each node is equal point of authority, without a need to route the updates through any central point of authority. It’s decentralized, i.e. if one server is destroyed, the information on the blockchain remains intact, since all nodes already have it. This eliminated middlemen by design. Since updates to blockchain can be done by any node, maintaining the order of transactions is imperative, and blockchain has consensus algorithm for this purpose. No existing block can be deleted, or updated, hence updating a blockchain is essentially adding a new block. A node can add a new block only after completing very significant number-crunching operations, in which they not only have to provide the details of their transaction, but also a reference to the last recorded block on the blockchain. Providing reference to the last recorded block is not easy, since it basically involves trying out numbers one after the other at a high speed, since the other nodes are also trying to create a new block in an intensely competitive environment. Only when a node provided proof of work (POW) after this massive number crunching before the other nodes can do so, the consensus algorithm approves the new block for addition to the blockchain. The number crunching, to be done very fast, is so resource intensive that nodes have to use special-purpose software, supported by specially designed hardware. The consensus algorithm and POW make efforts to hack blockchain economically non-viable, hence blockchain allows immutable record with complete audit trail.

The state government of Maharashtra is utilizing these features of blockchain and concentrating on use cases where it’s key to have immutable records with complete audit trail, in an environment where every stakeholder can see any new addition to the chain of record. The state government is exploring the following use cases:

The state government of Maharashtra has already organized a technology summit on blockchain in January 2018, with the help of the Federation of Indian Chambers of Commerce (FICCI), which is an industries association. Deloitte is their knowledge partner, and the government has also signed up with a few blockchain start-ups for the proof of concept (PoCs). Another state government in India, that of the southern Indian state of Andhra Pradesh, has already put the land records on blockchain, and was the first state government in India to run pilot projects involving this technology.